The Singapore Exchange (SGX) has
reported a rise in the trading of derivatives that give investors access to other
Asian markets, including growth in the number of contracts traded
algorithmically.

The figures were revealed in SGX's quarterly results statement and show daily average trading in
non-domestic Asian equity derivatives – referred to as ‘Asian gateway’
contracts by the exchange – grew by 11% to 274,757 contracts between October
and December 2011, compared to the same period in 2010.

Much of the growth in Asian
gateway contracts was attributable to the Chinese A50 product, which grew 116% year-on-year,
from an average of 7,851 contracts traded daily to 16,959 contracts year-on-year. Nikkei 225
options grew by 39% over the period, while trading in Indian Nifty contracts
increased by 22%, giving SGX a 4% market share in this instrument.

The proportion of Asian
derivatives traded algorithmically on SGX was 35% in the latest quarter,
compared to 29% in the same period in 2010.

The rise in electronic trading in
derivatives comes alongside a 16% increase in connectivity income, which rose
by 16% year-on-year to S$8.4 million (US$6.55 million). SGX said the growth in
connectivity revenue was largely driven by the introduction of co-location
services in April 2011. The bourse added that connectivity subscriptions
reached 182 for equities and 605 for derivatives in the last quarter.

In August 2011, SGX introduced a
new trading platform supplied by US exchange operator Nasdaq OMX as part of its
S$250 million (US$195 million) Reach technology project. The new trading
platform can match orders in under 90 microseconds and SGX hopes an improvement
to its technology will help to attract further participation from
high-frequency traders.

Overall derivatives revenue at SGX grew 11% to S$37.7 million (US$29.4 million), and represented a quarter of
SGX revenue between October and December last year, 5% higher than the same
period in 2010.

Securities revenue declined 34%
to S$53.2 million (US$41.5 million) in the last quarter, and represented 36% of
SGX revenue, down from 47% recorded in the last three months of 2010.

Total SGX revenues dropped from
S$172.2 million (US$134.4 million) to S$148.1 million (US$115.6 million) in the
last quarter, with net profit also declining by around S$10 million to S$65.4
million (US$51 billion).

“SGX reported a
net profit of $65.4 million in difficult market conditions following a decline
in securities turnover. We continue to expand our products and services,
including the start of the world’s first clearing of OTC foreign exchange
forwards,” commented Magnus Böcker, CEO, SGX. “During the quarter, we
effectively transferred customers’ positions and margins following the collapse
of MF Global. This demonstrates the importance of a strong and capable clearing
house. We remain cautious and focused on cost discipline amid global economic
challenges.”